1) What type of companies do you look to invest in, and What stage of a company’s life do you tend to invest?
I’m an Investment Director at CBPE Capital, with a focus on technology and consumer internet. I’m also an active angel investor and involved in a number of startups with Non-Executive roles.
As an angel, I’ll look at both seed and early series A stage rounds. Typically I aim to invest in 2-3 startups @ £10k-50k a year.
At CBPE, I lead our tech focus but also have a generalist position. We’re a later stage private equity investor, and we aim to back companies once they have reached a stable level of profitability. We provide growth and development capital as well as strategic board-level support. We have a £405m fund, and so can write an equity cheque of £20m-60m, which lets us invest in businesses with an enterprise value of up to £150m+.
Previously, I worked at BC Partners, a global private equity firm with advised funds of €12.6bn. At BC I used to invest in large international buyouts, with an enterprise value of over €500m.
2) In your opinion what is the best method approach an investor? – for example , as an applicant should you look for an introduction to an investor/ investor firm, or should you write in with your business plan strait to their office?
Introductions will always get you the best response. Good Angels, VCs, and PE teams all have a lot of daily inbound traffic, so referrals from a trusted source are understandably prioritised. Try to find a connection to an individual at the fund and reach out to that person to help introduce you.
If you can’t find a referral, a well-constructed direct approach still often works. Be specific about the individual you want to speak to, and make that point in your message (why them/their fund? why should they be interested in you? are they in a position to contribute beyond just financing as an investor?). Try to be concise in your message – just a few paragraphs outlining who you are, what your business does, and why you see an opportunity is enough. Don’t send a business plan on the first approach, it’s valuable IP and you should want to ensure you’re talking to the right person first.
3) What do you look for most from an application? – for example are they most interested in the team behind the business, or is the most important thing a flawless business plan. Is the most important thing the innovative product or a marketing strategy that sets the business apart?
A strong team is always the first thing I look for in an investment. Who are they? What drives them? Can they deliver on execution? A great business idea with a poor team will almost always fail, but a great team can deliver even in tough markets. Try to provide context and structure behind the team’s story and motivation, as well as examples of your ability to work together to deliver on plan. This is particularly important in your first meeting with a potential investor, as their buy-in to you will be the foundation of the investment.
4) What part of a business plan is most attractive to investors?
A good business plan is simple and focused. It should identify a demand for a product/service, explain how you intend to fulfil it, and how you’re differentiated from others. It’s difficult to prioritise one part of a plan over another, but the delivery of the message can be critical. As an investor, it’s my job to assess (and price) risk, and the greatest risk is often in the team’s ability to execute, so I look for clarity of thought and strategic vision.
Try to think about the questions investors will ask themselves, and address these openly in your presentation. I often start with “what do I have to believe for this investment to work?” and go from there. I’ll look at usual areas like market size, growth, competitive environment, and the position of the business within each, but then try to go beyond that to develop a deep understanding of each of the drivers/risks associated with the business so I can properly evaluate the opportunity.
Investors appreciate intellectual honesty. Avoid the temptation to go for a ‘hard sell’ and aim to present a constructive and balanced view of the opportunity. If you do this it will quite often differentiate you.
5) What should an applicant avoid doing when applying for funding – what is the worst thing they can do?
Don’t overcomplicate things. Keep your pitch short and simple and think carefully about what you’re trying to say. Be structured in your approach and have clear planning and prioritisation. If an investor can’t understand your idea clearly in a few minutes, the chances are it’ll be a struggle for them to get comfortable investing at all.
Always be transparent with your investors. Highlight the risks upfront, and establish an open and direct line of communication. Try not to surprise people and try to let your partners know bad news early. If you’ve got the right backers they’ll be smart and support you when times are tough.
6) What is the investment you are most proud of?
I’m proud of all my investments, both as an angel investor and private equity professional (even the ones that fail!).
7) What is the company you feel you missed out on investing in? and What types of companies or particular technologies are you most excited about right now?
I’m a great fan of businesses that are able to act as a platform which connect multiple suppliers with multiple buyers. If you can position yourself as a common point of information exchange, you can develop very scalable high growth opportunities, which have defensible competitive positions. Apply this to the consumer internet arena and you also typically get strong cashflow profiles with low working capital requirements and little capital expenditure – a great formula for success. A company such as Hailo would be a sound example of this approach.
8) what is the most recent company you invested in?
JTC Group, a trust and fund administrator in Jersey. It’s possibly one of the best examples I’ve seen of an entrepreneurial business that has embraced a deep employee ownership structure, and enjoyed significant success as a result of it.
I would like to thank Rob for taking the time in having an interview with The Startup Magazine, and if you do have any more questions, please leave a comment below. Alternatively you can connect with Rob directly over Linkedin here.
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